The two companies are expecting to complete the transaction by January 2017 if the deal secures approval from Virgin America shareholders and US regulators. Virgin called in a corporate team from longtime legal adviser Latham & Watkins to assist in the negotiation process, while Alaska Air was supported by partners from O'Melveny & Myers. The deal is the first commercial airline merger in the United States since the 2014 tie-up of US Airways and American Airlines, which created the world's largest carrier.
Though the companies' boards were reportedly 'unanimous' in their decision to back the deal, Virgin figurehead Sir Richard Branson has publicly lamented the sale.
'Because I'm not American, the US Department of Transportation stipulated that I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it,' Sir Branson said in a blog post published earlier this week.
Alaska Air's takeover of Virgin America marks the latest milestone in a slow but steady process of consolidation across the US commercial aviation market. At present, Virgin America accounts for about 1.5 per cent of US domestic flight capacity, while Alaska and its regional partners account for about 5 per cent. If cleared, the consolidated carrier will fall into fifth place nationally behind American Airlines, Delta Air Lines, Southwest Airlines and United Airlines—the four of which account for over 80 per cent of the US domestic market.
Sources: BBC; The Lawyer
Email your news and story ideas to: [email protected]
